Figure 18-1
illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. If the dollar price of pounds is $1.80, which of the following is true?
a.
There is an excess supply of pounds, and the dollar price of pounds will rise.
b.
There is an excess demand for pounds, and the dollar price of pounds will rise.
c.
There is an excess supply of pounds, and the dollar price of pounds will fall.
d.
There is an excess demand for pounds, and the dollar price of pounds will fall.
c
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Which of the following is TRUE regarding the real interest rate?
I. The real interest rate is the opportunity cost of borrowed funds. II. The real interest rate equals the nominal interest rate adjusted for inflation. A) I B) II C) both I and II D) neither I nor II
Professor Parallax chooses two students in his economics class, Jasmine and Cassandra, to participate in the ultimatum game. He chooses Jasmine to be the allocator and Cassandra to be the recipient
He gives Jasmine $50 and as the allocator, she gets to decide how to split the money with Cassandra. If Cassandra decides to accept the amount allocated to her by Jasmine, both students get to keep the money. If Cassandra decides to reject her allocation, neither student gets to keep the money. How much will each student end up with if each student acts as if fairness is important? How much will each student end up with if only Cassandra acts as if fairness is important? How much will each student end up with if neither student cares about fairness?
All else equal, if there are diminishing returns, then what happens to productivity if both capital and labor increase?
a. Productivity will definitely fall. b. Productivity will definitely be unchanged. c. Productivity will definitely rise. d. None of the above are necessarily correct.
Oil wells and seasonal resorts will often shut down temporarily because:
A. prices for their output temporarily fall below their average variable costs of production. B. fixed costs temporarily rise, making production unprofitable. C. variable costs for pumping oil and operating resorts fluctuate significantly. D. government regulations require seasonal shutdowns for maintenance purposes.